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Publication 587 2003 Tax Year

Publication 587
Introductory Material

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Important Changes for 2003

Family daycare providers may choose to use standard meal and snack rates. If you meet the requirements of a family daycare provider, you may choose to use the standard meal and snack rates to compute the deductible cost of food for eligible children cared for in your home. See Standard meal and snack rates, under Daycare Facility, later, to determine if you qualify for this option.

Standard mileage rates for 2003. The standard mileage rate for the cost of operating your car, van, pickup, or panel truck for 2003 is 36 cents a mile.

Addition of 50% special depreciation allowance. For qualified property you acquire and place in service after May 5, 2003, you can take a special depreciation allowance of 50% of the property's depreciable basis. However, you can elect to claim the 30% special depreciation allowance for property that qualifies for the 50% rate. For more information, see chapter 3 in Publication 946.

Increased section 179 deduction dollar limit. The maximum section 179 deduction you can elect for property you purchased and placed in service in 2003 is $100,000. For more information, see chapter 2 of Publication 946.

Inclusion of off-the-shelf computer software as eligible section 179 property. The types of property that qualify for the section 179 deduction have been expanded to include off-the-shelf computer software purchased and placed in service in 2003. For more information, see chapter 2 of Publication 946.

Important Changes for 2004

Standard mileage rate for 2004. The standard mileage rate for the cost of operating your car, van, pickup, or panel truck for 2004 is 37.5 cents a mile for all business miles.

Standard mileage rate available for small fleets. Beginning in 2004, the business standard mileage rate may be used for as many as four vehicles that you own or lease and use simultaneously.

Important Reminder

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1–800–THE–LOST (1–800–843–5678) if you recognize a child.

Introduction

The purpose of this publication is to provide information on figuring and claiming the deduction for business use of your home. The term home includes a house, apartment, condominium, mobile home, boat, or similar property, which provides basic living accommodations. It also includes structures on the property, such as an unattached garage, studio, barn, or greenhouse. However, it does not include any part of your property used exclusively as a hotel or inn.

This publication includes information on the following.

  • The requirements for qualifying to deduct expenses for the business use of your home (including special rules for storing inventory or product samples).
  • Types of expenses you can deduct.
  • How to figure the deduction (including depreciation of your home).
  • Special rules for daycare providers.
  • Selling a home that was used partly for business.
  • Deducting expenses for furniture and equipment used in your business.
  • Records you should keep.
  • Where to deduct your expenses.

If you are an employee or a partner, or you file Schedule F (Form 1040), Profit or Loss From Farming, use the worksheet on page 24 and its instructions which begin on page 25 to help figure your deduction. If you file Schedule C (Form 1040), Profit or Loss From Business, you must generally use Form 8829, Expenses for Business Use of Your Home. The Schedule C Example on pages 19 through 23 shows how to report the deduction on Form 8829.

The rules in this publication apply to individuals, trusts, estates, partnerships, and S corporations. They do not apply to corporations (other than S corporations). There are no special rules for the business use of a home by a partner or S corporation shareholder.

If you need information on deductions for renting out your property, see Publication 527, Residential Rental Property.

Comments and suggestions.

We welcome your comments about this publication and your suggestions for future editions.

You can email us at *[email protected]. Please put “Publications Comment” on the subject line.

You can write to us at the following address:


Internal Revenue Service
Business Forms and Publications
SE:W:CAR:MP:T:B
1111 Constitution Ave. NW
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

Useful Items - You may want to see:

Publication

  • 523 Selling Your Home
  • 551 Basis of Assets
  • 583 Starting a Business and Keeping Records
  • 946 How To Depreciate Property

Form (and Instructions)

  • Schedule C (Form 1040) Profit or Loss from Business
  • 2106 Employee Business Expenses
  • 2106–EZ Unreimbursed Employee Business Expenses
  • 4562 Depreciation and Amortization
  • 8829 Expenses for Business Use of Your Home

See How To Get Tax Help near the end of this publication for information about getting publications and forms.

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